HomeMy WebLinkAboutAGENDA REPORT 2003 0618 CC REG ITEM 09IMOORPARK CITY COUNCIL
AGENDA REPORT
ITEM q •
----- Lo_ -_ts -200 3
TO: Honorable City Council
FROM: Barry K. Hogan, Community Development DirectZ1,1714,
Prepared By: Scott Wolfe, Principal Planner
DATE: June 5, 2003 (CC Meeting of 6/18/03)
SUBJECT: Consider the Adoption of a City Policy for the
Application of Photovoltaic Systems on New
Construction and Existing Facilities within the City
BACKGROUND
On February 6, 2002, the City Council adopted Resolution 2002-
1938, approving Vesting Tentative Tract Map No. 5381 and the
accompanying Residential Planned Development No. 99 -02.
Condition No. 19(v) of this resolution requires that the CC &R's
for this development include "Language requiring a photovoltaic
system to be installed and maintained for each residential
dwelling unit, if the City adopts a policy and standards for
photovoltaic systems prior to January 31, 2004, or approval of
the first Final Map, whichever is later."
Subsequently, the City Council adopted its City Council Goals
and Objectives for 2002/2003. In these Goals, Departmental
Objective G -17 states that the Community Development shall
"Analyze feasibility and if feasible, prepare policy and
standards requiring installation of a photovoltaic system for
residential projects for consideration by Planning Commission
and City Council by June 30, 2003."
DISCUSSION
The feasibility of requiring the use of photovoltaic systems on
residential uses within the City has been evaluated by the
Community Development staff based upon current costs and the
benefits obtained from the systems. Also evaluated were other
S: \Community Development \ADMIN \COUNCIL \MiSC Reports \photovoltaics.doc
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June 18, 2003
Page 2
impacts which may accompany this type of requirement,
particularly from design and aesthetic standpoints.
The cost of photovoltaic generation has been steadily dropping,
as technological advancements in the composition and production
of the photovoltaic cells have been made. Recent advancements
have allowed the utilization of thinner and lighter matrices for
the placement of the silicon (or other photovoltaic material)
crystals (cells) used for electrical generation. While most
"panels" still suspend the cells between panes of glass or
similar material, new technologies have allowed the development
of thin, flexible film within which the photovoltaic cells are
suspended, as well as the ability to place these cells within
roof tiles in order to integrate the cells architecturally into
a structure.
The efficiency of cells is increasing even while the size and
cost of them are shrinking. Nascent technologies include
photovoltaic cells suspended in paint, which would allow
electrical generation over an entire surface area. While these
advances are showing promise, they are not yet commercially
available.
At this time, photovoltaic systems for single family residential
homes are generally limited to large panels or solar roof tiles.
Both forms of cells can provide a considerable portion of the
electrical energy requirements for a residence. With a large
enough system, enough energy can be produced during daylight
hours that night time power usage would be nearly matched,
resulting in almost no charges from the electric company.
Additionally, battery back -up systems can be integrated into
these photovoltaic systems so that power can be maintained
during blackouts. In fact, with a large enough system of cells,
and a large enough battery system, a home could derive all of
its electrical needs from photovoltaic sources.
While this may seem to be an ideal solution to many of the power
generation problems which have plagued California in recent
years, there are constraints which reduce the feasibility of
these systems. The two major constraints are cost to the
homeowner, and the aesthetic impact on the neighborhoods in
which they are utilized.
Honorable City Council
June 18, 2003
Page 3
Costs
While the cost of photovoltaic material production is decreasing
as technological advances occur, the decrease in price has not
kept pace with the decrease in prices of other technologies,
such as communications or computer technologies. The purchase
of a photovoltaic system which will provide the majority of a
home's power needs still requires a major up -front expense, and
the savings noted will not pay for themselves until the later
stages of the system's life span. In order for these systems to
reach a point where they will pay for themselves within their
life spans, the State offers incentives for purchasers of such
systems that meet certain requirements.
The incentives include a 50% rebate on the cost of the system,
and tax credits for up to 150 of the cost of the system. If the
system is financed as part of a new home purchase, refinance, or
with a home equity loan, savings are seen in the mortgage
interest deduction. These factors can bring the cost of a
system into a range where energy savings will eventually exceed
the actual money expended on the system, assuming that the cost
of electricity from the power company continues to increase over
the life of the system.
As an example, prices for photovoltaic systems are generally
running at about $8,000 - $10,000 per Kilowatt peak. A household
with an electric bill of $125.00 per month would need a 4.5
Kilowatt peak system to provide 910 of the household electrical
needs. For this example, it is assumed that 9% of the household
needs can be reduced through conservation efforts.
The assumptions used in this example are as follows:
Tax Status: Married filing jointly
Annual Income: $120,000
Mortgage: $450,000 @ 6.5% fixed for 30 years
Cost of System: $36,000 before incentives
$16,124 after incentives
House Position: South facing roof with optimal pitch
Power cost growth: 2.5% per year
Under these assumptions, even with the mortgage interest
deduction from the financing of the system, the system will
result in energy costs $68 per year more than they would be if
the power were only bought from the electric company. This
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June 18, 2003
Page 4
higher cost would diminish over time as the cost of purchased
power increases. In its sixth year, the system would see its
first savings over the cost of purchased power: $8 per year.
This savings would gradually increase over time, but would
eventually be tempered by the decrease in mortgage interest
deductions as the loan approaches pay -off. At the end of the
mortgage period, the photovoltaic system would have saved the
homeowner $4,718.00 in energy costs, far below the $16,124.00
cost of the system. Also important to remember is that this
does not include any maintenance costs associated with the
equipment, and assumes system prices at the lower end of the
range as well as optimal conditions for placement of panels for
maximum generation. Less than optimal conditions and higher
costs will negatively impact feasibility of these systems.
The primary factors affecting the economic feasibility of these
systems (aside from the incentives) are the size of the system
and the rate of increase of purchased power. A smaller system
would reduce the amount of power generated, increasing
dependence upon purchased power, but the initial cost of the
system and the associated finance costs would be less, resulting
in an ability for the system to eventually pay for itself,
although this point may be 15 years or more from the time of
installation.
Similarly, changes in
"break- even" point on
climb quickly over the
the system will always
power. However, if
dramatically, the phot
more quickly.
purchased power rates
the systems as well.
course of financing, it
be more expensive to ru
the cost of purchased
ovoltaic system may pay
can affect the
If rates do not
is possible that
n than purchasing
power increases
for itself much
There are a wide variety of variables which can impact the
feasibility of these systems. Economic variables, such as
purchased power costs, photovoltaic equipment costs, and
mortgage interest rates, as well as physical variables, such as
orientation of roof planes, the growth of trees on adjacent
properties, and surrounding topography, can have a tremendous
impact on the feasibility of a given system on a given home.
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June 18, 2003
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Aesthetic Issues
The aesthetic issues associated with these systems arise from
their very nature. The cells need to be exposed to the greatest
amount of light possible to generate power. This generally
means that they are mounted as high as possible on a given
property in order to minimize shadows from surrounding
buildings, trees, and topography.
In addition to high places being preferred, the orientation of
the panels must be aligned with the track of the sun across the
sky. This means that the panels must be on a roof plane which
faces a range of directions between southeast and southwest.
Thus, they cannot always be placed facing away from streets or
other areas of visibility from the public. The farther from the
generally southern direction the panels face, the more the
panels will need to be tilted to maximize their efficiency.
Tilting of the panels can raise them above the surface of the
roof, further accentuating their placement.
The prominent placement ensures that the visibility of the
panels will also be maximized. Camouflaging of the cells is
difficult, as tinting of the cells to blend with a given color
(while possible) results in a substantial loss in efficiency.
Because the cells are typically covered with glass, reflectivity
becomes an issue as well. As the sun moves across the sky, the
panels can be mirror -like in their ability to reflect sunlight
causing glare and visual impacts where a typical roofing
material would not. Even attempts to blend the panels into a
roof using dark gray tiles will be foiled by the reflectivity of
the panels. As with tinting, attempts to reduce the
reflectivity of the cell covering results in a loss of
efficiency.
Many visual impacts can be softened with the planting of
landscaping or the use of screens. In the case of photovoltaic
systems, the use of these techniques is limited as they often
result in screening the systems from the sunlight necessary for
their efficient function.
At least one company has produced photovoltaic cells built into
slate -like roofing tiles. These tiles allow the system to be
installed without mounting panels above the roof. The tiles can
be interspersed with non - photovoltaic tiles to spread the tiles
and reduce impact of the color and reflectivity of the system.
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June 18, 2003
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These are perhaps the best way to minimize the visual impact
that these systems produce, but they have a higher cost
associated with them, and generally require more work as they
most often will require a complete re- roofing of a house to
install them.
Conclusions
The contemplated requirement for photovoltaic systems to be
installed in all new residential structures is likely premature
given the state of technology at the present time. Optimal
conditions, which will not occur in the case of the majority of
homes in the City, result in only a partial reduction of
purchased power. Attempts to reach 100 percent generation of
needed power requires an investment of funds which will likely
not be recouped during the life of the system. Further, current
feasibility of even the smaller systems is dependent upon state
incentive programs, the availability of which cannot be relied
upon in future years.
Similar conclusions can be drawn about the use of these systems
for multiple family residential developments, as well as
commercial and industrial projects. These larger projects may
have large flat roof areas upon which these systems could be
installed. However, as was demonstrated by the residential
example above, as the system size increases to accommodate more
of the potential energy demands, the costs go up dramatically as
well. Even with State incentives, and accompanying tax
benefits, the "break- even" point for these systems will be in
the last few years of financing, given a 30 year loan, unless
the cost of purchased power rises in excess of 2.5% per year.
Incentives are lessened for owners of properties that are rented
to separately metered tenants, as the owner will bear the burden
of the financing, while the tenant will benefit from the savings
in power costs.
The State and the purveyors of electricity are offering
incentives to entice people to utilize these systems. There is
no guarantee that these incentives will continue, leaving open
the possibility that mandatory installation will render any
further construction infeasible due to the expense of complying
with such a requirement. Even if the incentives continue and
the power costs rise, the estimates here have assumed a 30 year
system life, which is probably very generous. Additionally, the
assumptions include no maintenance costs, which is not
Honorable City Council
June 18, 2003
Page 7
realistic, especially if the system lives are expected to reach
30 years. The inclusion of these factors into the assumptions
can quickly drive the costs into even higher ranges.
However, advances in this area of technology continue to occur.
Even with the state of technology today, there are many
homeowners who are opting to utilize the photovoltaic systems
available. While it may not be feasible to require all homes to
have photovoltaic systems installed, it might be prudent to
require structures to be constructed with the appropriate
generic roof mounting hardware and flashed conduits installed to
allow residents to avail themselves of these systems should they
become more feasible in the future. This would enable each
homeowner to determine at what point cost and benefit reach a
point that warrants use of these systems in their homes.
Should the City Council determine that this type of requirement
is worth consideration, staff would advise that the City Council
also consider establishing standards which would apply to the
installation and placement of these systems. As discussed
above, the installation of these systems can cause serious
visual impacts within neighborhoods and larger viewsheds. While
the City's ability to regulate these systems is limited by State
and Federal laws, there is some legitimate ability of the City
to exercise authority to protect the visual environment.
STAFF RECODONDATIONS
1. At this time determine that requiring installation of
photovoltaic systems on all new single family residential
construction is infeasible given the costs of the current
technologies;
2. Direct staff to add to standard conditions a requirement
for all new residential construction to incorporate roof
hardware to enable photovoltaic systems to be installed in
the future without removal of roofing material;
3. Direct staff to bring to the Planning Commission for
recommendation to the City Council, proposed standards for
the placement and treatment of photovoltaic systems in
residential areas, as well as in commercial and industrial
developments, should property owners wish to voluntarily
install photovoltaic systems.
Honorable City Council
June 18, 2003
Page 8
Attachments:
Photovoltaic System Cost Estimate
Photovoltaic System Savings Estimate
Clean Power Estimator
RESULTS
(Moorpark, CA)
Build System
PV System
Size (ac)
4.5 kW •
Cost Before Rebate (ac)
$8,000 per kWJ
Tilt Direction
302 . South
S stem Life Maintenance Cost
Loan Life —' $0 per year
ASSUMPTIONS
Electric Bill Annual escalation
$1,500 per year - 2.5% per Payment Method
New Home Loan
Loan Life Loan Rate
30 years 6.50%
Home Loan
$450,000
Tax Filing Status Taxable Income
[Married - jointly __ J$120,000 per year
Southern California Edison, Domestic Service (Schedule
D)
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error messages
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Page 1 of 1
This system will:
• Cost $16,124 ($36,000 before incentives)
• Have a net cost of $6 per month in the first year
• Meet 91% of current electricity consumption
• Produce /save 8,390 kWh of electricity in the first year
• Eliminate 10,404 lbs of CO2 emissions in the first year
CC ATTACHMENT 1
(ems 5.r
http: / /www .clean- power.com/cec /default.asp 6/6/2003
Clean Power Estimator
RESULTS
(Moorpark, CA)
Cumulative Cash Flow
PV System
Size (ac)
4.5 kW
Cost Before Rebate (ac)
$8,000 per kW --3-
Tilt Direction
30° South
System Life Maintenance Cost
Loan Life I $0 per year
ASSUMPTIONS
Electric Bill Annual escalation
$1,500 per year 2.5% per, year .
Payment Method
New Home Loan
Loan Life Loan Rate
30 years 6.50%°
Home Loan
$450,000
Tax Filing Status Taxable Income
Married -jointly A J$120,000 per year
Southern California Edison, Domestic Service (Schedule
D)
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error messages
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rights reserved.
M1
$3,000
i Ell
I (3,000) 2003
Page 1 of 1
Cumulative Cash Flaw
( PV = S1,138)
• Net Savings
2018
l- w
Cumulative Net Cash Flow
203:
(Sum of the Net Cash Flows in previous years - Not discountec
CC ATTACHMENT 2
nnrA�p r- .r
•• �/ .Jl. o.A J
http: / /www .clean- power.com/cec /default. asp 6/6/2003
Cumulative
Year
Net Cash Flow
Net Cash Flow
2003
$ (68)
$ (68)
2004
$ (r 1)
$ (120)
2005
$ (38)
$ (158)
2006
S(23)
$(181)
2007
$ (7)
$ (188)
2008
$8
$(18o)
2009
$24
$(156)
2010
$40
$(116)
2011
$55
$(61)
2012
$71
$10
2013
$87
$98
2014
$103
$201
2015
$120
$321
2016
$136
$457
2017
$152
$609
2018
$168
$777
2019
$184
$961
2020
$200
$1,161
2021
$216
$1,377
2022
$232
$1,609
2023
$247
$1,856
2024
$262
$2,119
2025
$277
$2,396
2026
$292
$2,688
2027
$306
$2,994
2028
$320
$3,314
2029
$333
$3,647
2030
$345
$3,992
2031
$357
$4,350
2032
$368
$4,718
CC ATTACHMENT 2
nnrA�p r- .r
•• �/ .Jl. o.A J
http: / /www .clean- power.com/cec /default. asp 6/6/2003